Accelerating India’s energy transition

Source: The post is based on the article “Accelerating India’s energy transition” published in Business standard on 15th July 2023.

Syllabus: GS 3 – Infrastructure (Energy)

News: In this article, the author discusses India’s heavy reliance on imported energy, its need for energy security, and how diversifying energy sources like increasing natural gas usage can help. A proposed five-pronged strategy for India’s gas policy is also highlighted.

About India current and future energy scenario

1. India heavily relies on imported energy, particularly oil and gas.
2. Over 50% of India’s energy needs are imported, posing economic and supply risks.
3. Renewable energy deployment has increased significantly in India.
4. Despite progress, India’s gas consumption is just 6-7%, below the global average of 25%.

5.Diversifying energy sources, including increasing natural gas use, is crucial for India’s future.

6.A proposed sub-sea gas corridor could enhance India’s energy security.

What is the significance of energy security for India?

India’s economic health: The energy imports in India, especially oil and gas, consistently exceed 50%, according to estimates from the International Energy Agency. This high dependence on imported energy exposes the Indian economy to uncertainties like fluctuating international prices and supply disruptions. Energy security can therefore stabilize the Indian economy by reducing its vulnerability to these risks.

Foundation for superpower status: For India to become a superpower, energy independence is a key policy goal. Energy security, thus, is integral to India’s national security. It ensures self-reliance and reduces geopolitical risks associated with energy imports.

Energy security and renewable energy: Over the past two decades, India has made significant progress in deploying renewable energy. While renewable energy is a part of the energy security solution, India should not rely solely on it. Diversifying the energy mix with low-carbon intensity options, like natural gas, can further enhance energy security.

Energy security and gas policies: Currently, natural gas makes up only 6-7% of India’s total energy consumption, much lower than the global average of 25%. A revised policy approach towards gas, as suggested by a five-pronged strategy, can help increase this share, further strengthening India’s energy security.

India’s global commitments: Improving energy security aligns with India’s commitments under the Paris Accord, making it both an economic and moral imperative.

What is the proposed “Five-Pronged Strategy” for India’s gas policy?

First, India needs to switch to a production sharing contractual system. This can help bring in the much-needed risk capital and expertise to explore and develop our basins, especially for gas.

Second, a time-bound programme should be adopted to dismantle administered pricing controls. This will provide a transparent and market-driven signal to both producers and consumers, allowing market dynamics to dictate pricing.

Third, unbundling transportation and marketing in the natural gas sector is essential. It will allow consumers to benefit from a liberalised marketing environment and enhance security of supply.

Fourth, policy reforms are needed in the electricity markets to ensure the viability of gas-based power. Creating instruments like time-of-day pricing and non-linear pricing can allow markets to absorb more flexible gas-based power.

Fifth, the implementation of gas-based micro-grids should be promoted. These are efficient and environmentally responsible, while also decentralising policymaking.

Finally, the creation of a sub-sea gas corridor linking the Gulf region and India could enhance energy security and contribute to regional stability.